Build from Scratch or Buy and Upgrade- Opinions Please...

I am a novice when it comes to building a system. I have been reading this forum for weeks to understand options, learn from the experts and confirm the right hardware. I had nearly seattled on the Gigabyte MA78GM-S2H AMD 780G + SB700 Chipset (micro ATX due to limited space), paired with AMD 940 or 955 and Radeon 4850. Then I saw this ad.............

HP Pavilion a6755y Refurbished Desktop PC -AMD Phenom X4 9550 2.2 GHz, 6GB DDR2, 640GB HDD, DVDRW, Vista Home Prem 64-bit $469.97 (Tiger Direct)
Specifications: Memory Supported 4.0GB - 32bit / 16GB - 64 bit Interface:SATA 3G Speed:7,200RPM DVD±RW/RAM Dual Layer Lightscribe
Integrated Audio: Audio ALC 888S chipset Channels:8 PCI Express x1 wireless card / LAN (802.11a/b/g/n)
Graphics Description:Integrated Graphics GPU/VPU:AMD 780G chipset Power:300 Watt DVI and VGA video interface

Rather than a build from scratch, considering buying this system, upgrading the power supply and adding a 9800GT or Radeon 4850 card.
YOUR OPINION PLEASE....
Is this system worthy / will I have heating issues with this approach? If worth pursuing- which power supply / graphics card do you recommend?

Note- This will be my primary PC for internet, some photo editing (Corel and Photo Shop) and video editing (Pinnacle software). If it can accommodate it, may also consider using the unit as a temporary solution for playing movies until such time that I build a sleek HDCP system exclusively for entertainment (music, blu-ray on 47" Full HD).

Thank you for your expert advise / taking the time to help a newbie.

building/upgrading a system to me is always better , if u have the space, upgrade because that system has been used, and u dont no for how long
and the 940 beats the 9950 hands down, the 4850 beats the 9800gt hands down